OFAC Posts Recent Penalty Information

On April 25, 2012, OFAC reported that Sandhill Scientific, Inc. (Sandhill) of Highlands Ranch, CO, a U.S. manufacturer of medical equipment, has agreed to remit $126,000 to settle allegations that it violated the Iranian Transactions Regulations (ITR) in May 2007 and OFAC's Reporting, Procedures and Penalties Regulations on separate occasions in May and July 2008. Specifically, OFAC alleged that on May 4, 2007, Sandhill exported medical equipment valued at $6,700 to Dubai, UAE, with knowledge that the goods were intended for transshipment to a company in Iran with which Sandhill had an exclusive distributor agreement. OFAC also alleged that Sandhill failed to provide documents responsive to two administrative subpoenas issued by OFAC during its investigation. 

Sandhill did not voluntarily disclose the matter to OFAC. OFAC determined that the alleged ITR violation constituted an egregious case because Sandhill's unlicensed export appears to have resulted from willful and reckless conduct in which the company's management was directly involved; Sandhill appears to have deliberately concealed the fact that the goods were destined for Iran; and Sandhill did not fully cooperate with the investigation. These determinations resulted in a base penalty amount of $250,000 for the alleged ITR violation. 

The settlement amount reflected the fact that Sandhill did not appear to have any compliance program in place at the time of the alleged violations; Sandhill did not appear to have taken any remedial action after the alleged violations came to its attention; the export may have been eligible for an OFAC license under the ITR; and OFAC had no record of any prior sanctions enforcement actions against Sandhill.  

On April 10, 2012, OFAC reported that Essie Cosmetics Ltd. (Essie) and its former individual corporate officer (Officer), of New York City, NY, have agreed to settle OFAC allegations involving Essie and the Officer's unlicensed exports to Iran in violation of the Iranian Transactions Regulations (ITR). The apparent violations pertain to Essie and Officer's knowing sale and export of nail care products on September 17, 2009, December 8, 2009 and February 23, 2010, to an Iranian distributor. Essie and the Officer did not voluntarily self-disclose the apparent violations and that the violations constituted an egregious case. The total transaction value for the three transactions settled with OFAC was $33,299, and the based penalty was $750,000. Essie, the Officer and OFAC agreed to settle in the amount of $450,000. The settlement amount reflected the fact that Essie and the Officer had no history of prior OFAC violations and have cooperated with the investigation.